A project has the following estimated data: Price = $49 per unit; variable costs = $21 per unit; fixed costs = $36,450; required return = 12 percent; initial investment = $53,400; life = four years. a. Ignoring the effect of taxes, what is the accounting break-even quantity? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the cash break-even quantity? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What is the financial break-even quantity? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d. What is the degree of operating leverage at the financial break-even level of output? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. a. Accounting break-even quantity b. Cash break-even quantity c. Financial break-even quantity d. DOL 1,929.00

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A project has the following estimated data: Price = $49 per unit; variable costs = $21 per unit; fixed costs = $36,450; required return =
12 percent; initial investment = $53,400; life = four years.
a. Ignoring the effect of taxes, what is the accounting break-even quantity?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
b. What is the cash break-even quantity?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
c. What is the financial break-even quantity?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
d. What is the degree of operating leverage at the financial break-even level of output?
Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.
a. Accounting break-even quantity
b. Cash break-even quantity
c. Financial break-even quantity
d. DOL
1,929.00
Transcribed Image Text:A project has the following estimated data: Price = $49 per unit; variable costs = $21 per unit; fixed costs = $36,450; required return = 12 percent; initial investment = $53,400; life = four years. a. Ignoring the effect of taxes, what is the accounting break-even quantity? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the cash break-even quantity? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What is the financial break-even quantity? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d. What is the degree of operating leverage at the financial break-even level of output? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. a. Accounting break-even quantity b. Cash break-even quantity c. Financial break-even quantity d. DOL 1,929.00
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